£10,000 Inheritance Tax Windfall for UK Property Owners
A small ray of sunshine in this difficult time. On the 6th April 2020, the UK government increased the residential nil rate band from £150,000 to £175,000. This relates to UK Inheritance tax which is charged at a rate of 40% on death, after exemptions and allowances. Therefore, an increase in the residential nil rate band of £25,000 saves £10,000 in inheritance tax.
What is Inheritance Tax?
Inheritance tax is a capital transfer tax. This is most often associated with gifts on death but can also be charged on lifetime gifts.
What Assets are Subject to this Tax?
For those who are classed as being domiciled in the UK, their worldwide assets are assessed for inheritance tax. For those who are non-UK domiciled, only their assets in the UK are assessed. Domicile is not necessarily where you live. For more information on this please click here.
Who Pays This Tax?
This Tax is usually paid from the estate of the deceased. However, those receiving gifts within 7 years of the death of the person giving the gift are liable for the tax on the gift they received unless otherwise directed in the Will.
When Is Inheritance Tax paid?
The tax is paid before any heirs receive their inheritance and before probate (the process of winding up an estate) is completed.
Is It Inevitable?
For those who do not plan and have assets in excess of £1,000,000 it is likely. Planning can significantly reduce your estate’s liability. This means your heirs and not the government receive more of your estate.
This increase was planned several years ago. This now means that a married couple from the UK owning a property valued at £350,000 or more can pass on £1,000,000 in assets to their children without worrying about this Tax.
Where do I find out more?
For a free initial consultation, please fill in the contact form or call me on 050 594 5217.